Combined finances of union and states, Microeconomics

Assignment Help:

COMBINED FINANCES OF UNION AND STATES:

Taxes on goods and services are levied in India in various forms and at different levels of Government, Centre, states, and local bodies. Among the taxes that are leviable on goods and services, are customs and excises levied by the Centre and sales taxes levied by the states. These three taken together account for about 70 per cent of the total tax revenue and over 80 per cent of the aggregate revenue from indirect taxes. Indirect taxes are taxes on goods and services have for a long time been the dominant source of Government revenue in India, and their significance has grown sharply after Independence. The increase that has taken place in the level of taxation in the Indian economy over the past five decades - from 6.3 per cent of GDP in 1950 -51 to nearly 16 per cent at the end of century is attributable almost wholly to indirect taxes. While direct taxation has remained at around 2.3 to 3.6 per cent of GDP, the ratio of indirect taxes has risen from 4.0 to over 12 per cent. Predominance of indirect taxes is a well-known characteristic of India's tax structure. Factors responsible for this are: (i) dominance of the unorganised sector, (ii) poor literacy level, (iii) absence of standard accounting practices, (iv) low level of per capita income, and (v) problems inherent in the economy which create many administrative problems. Therefore, governments usually fall back on taxes on foreign trade, on the one hand, and on domestic production and trade, on the other, to meet the revenue requirements.    

Direct taxes of the combined Government sector (Centre and States put together) which constituted about 27 per cent, on an average, of the total tax revenues during the three decades of the fifties to seventies, eroded to about 15 per cent during the 1980s and remained at around 16 per cent, on an average, during the 1990s so far. One of the major problems in Government finances pertains to the constraints in raising resources through tax and non-tax measures. With the ongoing fiscal reforms there has been some improvement in direct tax collection. Non-tax revenue has not shown any noticeable increase. Moreover, the non-tax revenue generation process is hampered by the high quantum of subsidies both hidden and explicit.


Related Discussions:- Combined finances of union and states

Perfect competition in neoclassical economics, Q. Perfect Competition in ne...

Q. Perfect Competition in neoclassical economics? Perfect Competition: An abstract assumption, central to neoclassical economics, in that companies are so small that none can i

Economic growth, a.  Referring to the table below and using the "Rule of 70...

a.  Referring to the table below and using the "Rule of 70," comment on long-term changes in the standard of living in the United States?  b.  Would you rather live in the Unite

Explain about capital flight, Q. Explain about Capital Flight? Capital ...

Q. Explain about Capital Flight? Capital Flight: A destructive process in that investors (both domestic residents and foreigners) withdraw their financial capital from a countr

What is extracellular digestion, Extracellular digestion is that in which f...

Extracellular digestion is that in which food breaking into utile molecules that can be internalized by the cell is completed in the extracellular space, i.e., outside the cell. In

Need anser, Consider what would happen if a taxes of 10000$ was imposed on ...

Consider what would happen if a taxes of 10000$ was imposed on imported automobiles on dealers.Using a demand and supply diagram, show its impact of price and quantity. Suppose the

State about the prices - price level, State about the prices - Price level ...

State about the prices - Price level Prices are of great significance in macroeconomics as indeed they are in microeconomics. Though, in microeconomics we are more interested i

Advertising budget, Analyse the method by which a firm can allocate the giv...

Analyse the method by which a firm can allocate the given advertising budget between different media for advertisement?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd